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Savings

Savings and Loans companies told to stop investing depositors’ funds in real estate

The Executive Secretary of the Ghana Association of Savings and Loans Companies, Tweneboah Kodua Boakye, has cautioned its members to stop investing short-term depositors’ funds into long-term portfolio such as real estate.

Commenting on the challenges facing the savings and loans sector, Mr. Boakye explained that the association’s members would have to support each other through difficult moments.

“The era where concerns of customers (depositors) are thrown to the backbench and short-term deposits invested in long-term portfolio such as real estate should come to an end,” he told savings and loans companies.

Mr. Boakye’s advice comes on the back of several accusations leveled against a number of financial institutions that have sunk depositors’ funds into long term investment which has led customers unable to access their funds – degenerating into a liquidity crisis.

According to the GHASALC Executive Secretary, good asset-liability management should be entrenched while addressing customer concerns in a more professional manner. It is our expectation that members will continue to comply with all relevant directives from the central bank as well as improving transparency in business operations.

Challenges

The Bank of Ghana has pursued a number of reforms in the banking sector which have affected a number of financial institutions.

In all, nine banks have been closed with more than 370 microfinance institutions also shut down due to various reasons.

The Bank of Ghana has further served notice that it will soon turn its attention to the savings and loans sector when it secures funds from the Ministry of Finance.

There are about 38 savings and loans companies, out of which a number of them have been undergoing liquidity challenges and are unable to meet depositors’ demand.

The Executive Secretary of the Association of Savings and Loans Companies appealed to the central bank to come to the aid of its members which can do well with support.

“Do not leave them to sink. Save what can be saved. Pull the sector along to the city we all hoped for,” he said.

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